Samuelson condition

The Samuelson condition, authored by Paul Samuelson [Samuelson, Paul A. (1954), The Theory of Public Expenditure, in: Review of Economics and Statistics 36, pp.386-389.] , in the theory of public goods in economics, is a condition for the efficient provision of public goods. When satisfied, the Samuelson condition implies that further substituting private goods provision for public goods provision (or vice versa) would result in a decrease of social utility.

For an economy with n consumers the conditions reads as follows:

:$sum\_\{i=1\}^n\; MRS\_i\; =\; MRT$

$MRS\_i$ is individual "i"'s marginal rate of substitution and MRT is the economy's marginal rate of transformation between the public good and an arbitrarily chosen private good.

References

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* Brümmerhoff, Dieter (2001), Finanzwissenschaft, München u.a.O.

ee also

* Lindahl equilibrium